Tax Depreciation | 4 min read
Do insurance repairs, storm damage or builder works affect depreciation?
Repairs, insurance works and builder scopes can affect depreciation where they replace, improve or alter parts of an income-producing property.
Repairs and improvements are not the same thing
A repair may restore something to working condition. An improvement may alter, upgrade or replace part of the property in a way that changes the depreciation review.
Insurance scopes and builder invoices often include a mix of work types, so the detail matters.
Your accountant should confirm tax treatment, but a quantity surveyor can help organise the property and construction information.
When insurance works should trigger a review
Review your schedule if storm, water, fire or impact damage led to major replacement works, new fixtures, rebuilt areas, structural works or significant external works.
Also consider a review if strata common property works changed lifts, services, roofs, balconies, basements or shared facilities.
The existing depreciation schedule may have been prepared before these works existed.
What to send for assessment
Useful records include the insurance scope, builder quotes, invoices, photos, completion dates, strata notices and the existing depreciation schedule.
BWK Group can review whether the work belongs in a depreciation update, a new schedule, or a separate insurance/replacement cost discussion.
That helps keep tax depreciation and insurance valuation issues clear rather than bundled together.
Next step
Want to see what a professional report includes?
If you are not ready to request a quote, request sample report formats first. You can review the structure, assumptions and level of detail before deciding which report is right.
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FAQs
Common questions
Do insurance repairs always change depreciation?
No. It depends on whether the works repaired, replaced, improved or added assets, and how your accountant treats the expenditure.
Can storm damage works affect my depreciation report?
They can if the works changed the property, replaced assets or created new capital works that are not included in the existing schedule.